In preparing for recession: Get Rid Of Your Debt With These Debt Defying Strategies

By Silicon Valley Blogger in Credit, Debt, Loans
I had a similar piece up at the Prosper Blog a while back but I wanted to touch on this topic further. Nothing earth-shatteringly new here, just common sense.
I get a lot of questions from readers who ask about what they should do about their mounting debt. A few of them have seen their debt problems start very early, usually materializing while they are at school (or in college to be exact) — when student loans and credit card debt begin piling up. In a way, I would expect this to be the case for students who aren’t able to receive assistance from their families or who aren’t fortunate enough to get grants or scholarships. At that period in their lives, their capacity to earn hasn’t much exceeded their spending and it would take herculean discipline to avoid debt altogether.

It’s also a fact that debt is on the rise with the average credit card balance growing from $4,800 in 2007 to a predicted $5,500 in 2008, with 60% of card holders unable to pay their balance in full. When those numbers add up, it can be pretty overwhelming.

Still, with enough discipline, determination and commitment, debt is something you can manage and control. I am fairly debt averse so the only loan I have is my mortgage. In order for things to stay that way, I refer to these strategies to make sure I stay relatively debt free. These strategies have been echoed time and again throughout financial literature, but I thought it would be worth reminding ourselves what specific, concrete techniques do exist to help us pare down our debt obligations.


10 Concrete Strategies To Get Out Of Debt
#1 Stop racking up any more debt and instead, start using cash. Cut up and throw out your cards and use cash. Without the tools to incur debt, you won’t. The key is persistence and applying the strict cash regimen as long as you want to control your spending. Along with sticking to cash transactions, work on a budget if you haven’t done so already, and carefully track where all your money goes.

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http://www.thedigeratilife.com/blog/index.php/2008/01/08/get-rid-of-your-debt-with-these-debt-defying-strategies/

Increase your income and decrease your expenses. Wow, such insight. What a waste of time. By the way tearing up your credit cards might not be such a great idea if you actually need short term loans due to an unexpected financial crisis.

That is the economic status of a vast majority of working families. They are one layoff, one serious illness, away from financial disaster. How do folks living paycheck to paycheck prepare for getting fired? They hope for the best and deal with what happens one day at a time.

many places they could have saved, cigarettes, alcohol, nights on the town, etc. I have seen many paycheck to paycheck people buy things they did not need simply because they were 'on sale'. Also paycheck to paycheck people will buy new more often than savers. I furnished much of my house by buying at goodwill.

Live Prosperously that I read in the early 1990s that helped me a lot. Most books dealt with what to do with an extra $5000 or some nonsense like that. This one was very basic and motivational. There were a couple of things I didn't agree with - like taking a month off before beginning the program and not opening your mail for an emotional break, I was ready to get going - but the one thing I really remember was the creative thinking. With this book you never "debt" again (debt is a verb) and when something comes up that you don't have the money for, you write down all the crazy ideas you can possibly think of to deal with this problem without debting and eventually something will make sense on that list. I have used that several times. Anyway, it is by Jerrold Mundis if it is still in print, in case anyone might be looking for direction. It is a little bit 12-steppy but I read a lot of books and this one helped me the most.

#9 Make the best use of your money. If you have money saved up earning very low rates of return in a cash account, utilize these funds towards paying down higher interest debt. There’s been discussion around the blogosphere about whether you should build an emergency cash fund while you still have debt to take care of, and the resounding advice has been to pay down the high interest debt first because of how much it’s costing you.

Really? I feel "safe (or safer)" with some cash money and some money in savings.